Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Summary of the Major Components of the Company's Income Tax Expense

The following is a summary of the major components of the Company’s income tax expense:



(in millions of Canadian dollars)	2018			2017			2016
Current income tax expense	$	381		$	303		$	233
Deferred income tax expense
Origination and reversal of temporary differences	214			371			336
Effect of tax rate decrease	(21		)	(541		)	—
Effect of hedge of net investment in foreign subsidiaries	64			(42		)	(20		)
Other	(1		)	2			4
Total deferred income tax expense (recovery)	256			(210		)	320
Total income taxes	$	637		$	93		$	553
Income before income tax expense
Canada	$	1,788		$	1,829		$	1,513
Foreign	800			669			639
Total income before income tax expense	$	2,588		$	2,498		$	2,152
Income tax expense
Current
Canada	$	336		$	257		$	165
Foreign	45			46			68
Total current income tax expense	381			303			233
Deferred
Canada	174			256			207
Foreign	82			(466		)	113
Total deferred income tax expense (recovery)	256			(210		)	320
Total income taxes	$	637		$	93		$	553

Components of Deferred Income Tax Assets and Liabilities

The items comprising the deferred income tax assets and liabilities are as follows:



(in millions of Canadian dollars)	2018			2017
Deferred income tax assets
Amount related to tax losses carried forward	$	11		$	12
Liabilities carrying value in excess of tax basis	97			77
Unrealized foreign exchange losses	85			11
Environmental remediation costs	23			16
Other	2			11
Total deferred income tax assets	218			127
Less: Valuation allowance	(5		)	—
Total net deferred income tax assets	213			127
Deferred income tax liabilities
Properties carrying value in excess of tax basis	3,496			3,181
Pensions carrying value in excess of tax basis	164			226
Other	71			41
Total deferred income tax liabilities	3,731			3,448
Total net deferred income tax liabilities	$	3,518		$	3,321

Expected Income Tax Expense Reconciled To Income Tax Expense

Expected income tax expense at statutory rates is reconciled to income tax expense as follows:



(in millions of Canadian dollars, except percentage)	2018			2017			2016
Statutory federal and provincial income tax rate (Canada)	26.86		%	26.56		%	26.65		%
Expected income tax expense at Canadian enacted statutory tax rates	$	695		$	663		$	573
Increase (decrease) in taxes resulting from:
Losses (gains) not subject to tax	8			(27		)	(23		)
Canadian tax rate differentials	—			1			—
Foreign tax rate differentials	(55		)	(9		)	—
Effect of tax rate decrease	(21		)	(541		)	—
Valuation allowance	5			—			—
Other	5			6			3
Income tax expense	$	637		$	93		$	553

Reconciliation of Uncertain Tax Positions In Relation To Unrecognized Tax Benefits for Canada and the United States

The following table provides a reconciliation of uncertain tax positions in relation to unrecognized tax benefits for Canada and the U.S. for the year ended December 31, 2018:



(in millions of Canadian dollars)	2018			2017		2016
Unrecognized tax benefits at January 1	$	13		$	13	$	15
Increase in unrecognized:
Tax benefits related to the current year	1			—		—
Dispositions:
Gross uncertain tax benefits related to prior years	(1		)	—		(2		)
Unrecognized tax benefits at December 31	$	13		$	13	$	13